NORBORD REPORTS FIRST QUARTER 2011 RESULTS

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    Note:  Financial references in US dollars unless otherwise indicated.
           All prior period comparative figures have been restated for IFRS.

    Q1 2011 HIGHLIGHTS

    -   Achieved positive EBITDA of $14 million
    -   European panel shipments grew by 29% vs. Q1 2010; North American OSB
        shipments up 16%
    -   Nacogdoches, Texas mill surpassed 3 years without a recordable injury
    -   Added two new lenders to bank group and extended bank line maturity
        to 2014
    -   Standard & Poor's and Moody's upgraded Norbord's credit rating
        outlook to 'stable'
    >>

TORONTO, April 28, 2011 /CNW/ - Norbord Inc. (TSX: NBD, NBD.WT) today reported positive EBITDA of $14 million in the first quarter of 2011, a $6 million improvement from the same quarter last year and unchanged from the fourth quarter of 2010. North American operations generated EBITDA of $7 million in the first quarter of 2011 versus $8 million in both the first and fourth quarters of 2010. European operations generated EBITDA of $11 million in the first quarter of 2011 versus $4 million and $11 million in the first and fourth quarters of 2010, respectively.

Norbord recorded a loss of $2 million or $0.05 per share in the first quarter of 2011 compared to $7 million or $0.16 per share in the same quarter last year and $9 million or $0.21 per share in the prior quarter.

"Our first quarter results improved from a year ago and were better than we expected," said Barrie Shineton, President and CEO. "I continue to be pleased with the performance of our European business which almost tripled its EBITDA contribution of last year. Our UK-based business is benefitting from a currency advantage that is positively impacting both domestic markets and export opportunities. Our European mills ran at capacity and panel shipments were up by almost 30%. In North America, our sales volume to our core home improvement and industrial customers was strong and we expanded our export order files."

"I expect the positive momentum we are seeing in our European business to continue. In North America, I am not discouraged by the slow start to this year. Repair and renovation activity has picked up, existing home sales are recovering, US economic news is improving and unemployment numbers are falling. As a result, I believe we will begin to see stronger housing activity in the second half of 2011."

Market Conditions

In North America, actual first quarter US housing starts were 10% lower than the first quarter of 2010. This likely reflects the impact of last year's US home buyer tax credit that pulled forward demand into the first half of last year. North Central benchmark OSB prices averaged $198 per thousand square feet (Msf) (7/16-inch basis) in the first quarter compared to $212 and $191 per Msf in the first and fourth quarters of 2010, respectively. Experts now forecast between 0.60 and 0.65 million US housing starts in 2011, a modest improvement over the 0.59 million houses started in 2010.

In Europe, despite adverse weather conditions in the early part of the quarter, panel markets continued to show strength. Panel prices held firm at the prior quarter's robust levels and average OSB, particleboard and MDF prices were up by 18%, 7% and 11%, respectively, versus the first quarter last year. These strong markets are expected to continue.

Performance

In North America, first quarter OSB shipment volumes increased by 16% versus the same quarter last year and Norbord's operating OSB mills ran at approximately 85% of their capacity. Including the Company's two indefinitely closed mills, the North American operations ran at approximately 65% of estimated capacity in the first quarter of 2011, the same operating level as the first and fourth quarters of 2010.

Norbord's North American OSB cash production costs per unit decreased by 2% versus the same quarter last year when adverse weather impacted costs in the southern US. Higher shipment volumes and improved raw material usages more than offset the negative impact of slightly higher resin prices and the stronger Canadian dollar.

In Europe, panel shipments grew by 29% over the same quarter last year as demand remained strong and the Company's mills ran well. Norbord's mills produced at 105% of estimated capacity in the quarter, versus approximately 90% in the first and fourth quarters of 2010, as three mills set production records this quarter. The higher panel prices and shipment volumes more than offset the significantly higher fibre and resin prices versus last year.

Capital investments totaled $8 million in the first quarter of 2011 compared to $7 million in the prior quarter and $1 million in the first quarter of 2010. Norbord's total 2011 capital investment is expected to be modestly higher than last year at $25 million, which includes an upgrade to the Cowie, Scotland particleboard mill that will be complete by the middle of this year.

The Company's operating working capital increased in the first quarter due to seasonal logging in the northern mills. Finished goods inventory remains at minimal levels and accounts receivable performance is in line with prior periods. The Company's tangible net worth for financial covenant purposes was $351 million and net debt to total capitalization on a book basis was 51%.

Developments

During the quarter, Standard & Poor's and Moody's upgraded the outlook on Norbord's credit ratings to 'stable'. All three rating agencies now rate Norbord's long-term issuer credit at BB-, or the equivalent, with a 'stable' outlook.

Subsequent to period-end, the Company renewed its bank lines, adding two new lenders and extending the maturity by one year. The Company now has total committed revolving bank lines of $270 million which mature in May 2014. Taking the renewed bank line commitment into account, Norbord had unutilized liquidity of $343 million at period-end, consisting of $260 million in revolving bank lines and $83 million in cash and cash equivalents.

Effective January 1, 2011, the Company has adopted International Financial Reporting Standards (IFRS). This is the first interim reporting period under IFRS. Extensive transitional disclosure was provided in the 2010 Annual Management's Discussion and Analysis, in addition to the Q1 2011 Consolidated Financial Statements. There is no material impact to earnings or cash flow as a result of the Company's conversion to IFRS.

Additional Information

Norbord's Q1 2011 letter to shareholders, news release, management's discussion & analysis, consolidated unaudited financial statements and notes to the financial statements have been filed on SEDAR (www.sedar.com) and are available in the investor section of the Company's website at www.norbord.com. Shareholders are encouraged to read this material.

Conference Call

Norbord will hold a conference call for analysts and institutional investors on Thursday, April 28, 2011 at 2:00 p.m. ET. The call will be broadcast live over the Internet via www.norbord.com and www.newswire.ca. A replay number will be available approximately one hour after completion of the call and will be accessible until May 27, 2011 by dialing 1-888-203-1112 or 647-436-0148. The passcode is 3283860. Audio playback and a written transcript will be available on the Norbord website.

Norbord Profile

Norbord Inc. is an international producer of wood-based panels with assets of $1 billion, employing approximately 2,030 people at 13 plant locations in the United States, Europe and Canada. Norbord is one of the world's largest producers of oriented strand board (OSB). In addition to OSB, Norbord manufactures particleboard, medium density fibreboard (MDF) and related value-added products. Norbord is a publicly traded company listed on the Toronto Stock Exchange under the symbols NBD and NBD.WT.

This news release contains forward-looking statements, as defined in applicable legislation, including statements related to our strategy, projects, plans, future financial or operating performance and other statements that express management's expectations or estimates of future performance. Often, but not always, words such as "expect," "should," "will," "will not," "forecasts," "suggest," "expects," "may," and other expressions which are predictions of or indicate future events, trends or prospects and which do not relate to historical matters identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Norbord to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Although Norbord believes it has a reasonable basis for making these forward-looking statements, readers are cautioned not to place undue reliance on such forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predictions, forecasts and other forward-looking statements will not occur. Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include: general economic conditions; risks inherent with product concentration; effects of competition and product pricing pressures; risks inherent with customer dependence; effects of variations in the price and availability of manufacturing inputs; risks inherent with a capital intensive industry; and other risks and factors described from time to time in filings with Canadian securities regulatory authorities.

Except as required by applicable laws, Norbord does not undertake to update any forward-looking statements, whether as a result of new information, future events or otherwise, or to publicly update or revise the above list of factors affecting this information. See the "Caution Regarding Forward-Looking Information" statement in the March 1, 2010 Annual Information Form and the cautionary statement contained in the "Forward-Looking Statements" section of the 2010 Management's Discussion and Analysis dated January 28, 2011 and Q1 2011 Management's Discussion and Analysis dated April 28, 2011.

April 28, 2011

To our Shareholders,

Our first quarter results are significantly improved from a year ago. The Company generated positive EBITDA of $14 million, nearly double the same quarter last year. This better-than-expected outcome was driven by stronger sales in North America and the excellent performance of our European operations.

In North America, overall sales volumes grew significantly by 16% from last year, as orders from our home improvement, industrial and export customers picked up. This suggests our shift to a customer base that is less reliant on new home construction is working well. North Central benchmark OSB prices firmed during the first quarter, averaging $198/Msf. This is a modest gain from the prior quarter but lower than the same period in 2010.

I am extremely pleased with our European business. These operations represent only one-quarter of our total production capacity, but contributed over three-quarters of Norbord's total EBITDA in Q1. European markets and prices were stronger than expected and our panel shipments increased by almost 30% over last year. Our mills ran at full capacity with three of our four manufacturing lines setting new production records this quarter. Our mostly UK-based mills continue to benefit from a weaker pound. This limits competing panel imports to the UK and allows us to ramp up exports to the Continent. The geographic diversification I've often spoken of is clearly paying off.

Recent US housing numbers are not overly encouraging and the market continues to face significant headwinds. The consensus forecast is now calling for 625,000 housing starts in 2011, still a very low number. However, it is modestly higher than last year and suggests the second half of this year will be stronger than the first. Housing affordability has reached, and is expected to remain at, record highs. Personal income will grow as employment rebounds and household wealth has already increased from recessionary lows. Pent-up demand for new homes continues to grow and homebuilders are reporting renewed interest from potential buyers. Positive momentum is building, albeit slowly, and it will likely take at least the rest of this year to translate into a meaningful housing recovery.

As I look forward to the second quarter, the price bump we saw in North America last year has not materialized - nor did I expect it to. In addition, we continue to experience price pressure on our raw material inputs, particularly resin and wood. We are working hard to offset the impact of these higher costs with aggressive margin improvement initiatives. And I expect Europe to deliver strong results again next quarter.

Like all Canadian public companies, this is our first quarter reporting under International Financial Reporting Standards (IFRS). As I noted last year, these new accounting rules have no material impact on Norbord's earnings or cash flow. But you will notice our first quarter financial statements and note disclosure have a 'new look'.

As we move through 2011, Norbord is in much stronger financial shape. We have liquidity of over $300 million including substantial cash on hand. We recently renewed our bank lines and two new lenders have joined our bank group. Our core long-term debt has manageable maturities and bond markets continue to be receptive to refinancing. Finally, the rating agencies recently upgraded their outlook on Norbord's credit to 'stable'. I am comfortable that we can support all of our operating and capital priorities for the foreseeable future.

Things are getting better and I am optimistic about the future. Our North American mills have proven that they can perform well, even in a less-than-optimal market environment. Our European business is delivering and I expect this to continue. We have cost saving initiatives under way that will deliver benefits to the bottom line this year. I remain confident in Norbord's ability to deliver superior financial results when the housing recovery takes hold.

I look forward to reporting on our progress throughout the year.

(signed)

J. Barrie Shineton

This letter includes forward-looking statements, as defined by applicable securities legislation including statements related to our strategy, projects, plans, future financial or operating performance and other statements that express management's expectations or estimates of future performance. Often, but not always, forward-looking statements can be identified by the use of words such as "believe," "should," "expect," "suggest," "likely," "would," or variations of such words and phrases or statements that certain actions "may," "could," "must," "would," "might," or "will" be undertaken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Norbord to be materially different from any future results, performance or achievement expressed or implied by the forward-looking statements. See the cautionary language in the Forward-Looking Statements section of the 2010 Management's Discussion and Analysis dated January 28, 2011 and Q1 2011 Management's Discussion and Analysis dated April 28, 2011.

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    Consolidated Balance Sheets

    -------------------------------------------------------------------------
    (unaudited) (US $ millions)         Note       Apr 2,   Dec 31,    Jan 1,
                                                    2011    2010(1)   2010(1)
    -------------------------------------------------------------------------
    Assets
    Current assets
      Cash and cash equivalents                 $     83  $    111  $     20
      Accounts receivable                 4          114        90        88
      Tax receivable                                   5         6        57
      Inventory                           5          102        84        72
    -------------------------------------------------------------------------
                                                     304       291       237

    Non-current assets
      Property, plant and equipment      16          814       814       854
      Other assets                        6            5        13        14
    -------------------------------------------------------------------------
                                                     819       827       868
    -------------------------------------------------------------------------
                                                $  1,123  $  1,118  $  1,105
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders'
     Equity
    Current liabilities
      Accounts payable and accrued
       liabilities                              $    165  $    164  $    139

    Non-current liabilities
      Long-term debt                      7          442       443       471
      Other long-term debt                4           69        60        62
      Other liabilities                   8           34        35        27
      Deferred income taxes                           78        85        85
    -------------------------------------------------------------------------
                                                     623       623       645
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    Shareholders' equity                             335       331       321
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                                                $  1,123  $  1,118  $  1,105
    -------------------------------------------------------------------------
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    (1) Refer to Note 3 for effects of adoption of IFRS
    (See accompanying notes)



    Consolidated Statements of Earnings

    -------------------------------------------------------------------------
    (unaudited)                                                 Q1        Q1
    Quarters ended April 2 and March 27 (US $ millions,       2011    2010(1)
     except per share information)
    -------------------------------------------------------------------------
    Sales                                                 $    253  $    197
    -------------------------------------------------------------------------
    Earnings before interest, income tax and
     depreciation                                               14         8

    Interest expense                                            (8)       (8)
    -------------------------------------------------------------------------
    Earnings before income tax and depreciation                  6         -

    Depreciation                                               (14)      (11)
    Income tax                                                   6         4
    -------------------------------------------------------------------------
    Earnings                                              $     (2) $     (7)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per common share
      Basic and Diluted                                   $  (0.05) $  (0.16)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to Note 3 for effects of adoption of IFRS
    (See accompanying notes)



    Consolidated Statements of Comprehensive Income/(Loss)

    -------------------------------------------------------------------------
    (unaudited)                                                 Q1        Q1
    Quarters ended April 2 and March 27 (US $ millions)       2011    2010(1)
    -------------------------------------------------------------------------
    Earnings                                              $     (2) $     (7)
    Other comprehensive income (loss)
      Foreign currency translation gain (loss) on foreign
       operations                                                8       (14)
      Net (loss) gain on hedge of net investment in
       foreign operations                                       (5)       11
      Actuarial gain (loss) on defined benefit pension
       obligation                                                2        (3)
      Deferred income tax on the above                           -        (2)
    -------------------------------------------------------------------------
                                                                 5        (8)
    -------------------------------------------------------------------------
    Comprehensive income (loss)                           $      3  $    (15)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to Note 3 for effects of adoption of IFRS
    (See accompanying notes)



    Consolidated Statements of Changes in Shareholders' Equity

    -------------------------------------------------------------------------
    (unaudited)                                   Note          Q1        Q1
    Quarters ended April 2 and March 27                       2011    2010(1)
     (US $ millions)
    -------------------------------------------------------------------------
    Share Capital
    Balance, beginning and end of period                  $    340  $    335
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    Contributed Surplus
    Balance, beginning of period                          $     41  $     40
    Stock-based compensation                        9            1         -
    -------------------------------------------------------------------------
    Balance, end of period                                $     42  $     40
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    Retained Earnings
    Balance, beginning of period                          $    (44) $    (57)
    Earnings                                                    (2)       (7)
    -------------------------------------------------------------------------
    Balance, end of period                                $    (46) $    (64)
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    Accumulated Other Comprehensive Loss
    Balance, beginning of period                          $     (6) $      3
    Other comprehensive income (loss)                            5        (8)
    -------------------------------------------------------------------------
    Balance, end of period                          9     $     (1) $     (5)
    -------------------------------------------------------------------------

    Shareholders' equity                                  $    335  $    306
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to Note 3 for effects of adoption of IFRS
    (See accompanying notes)



    Consolidated Statements of Cash Flows

    -------------------------------------------------------------------------
    (unaudited)                                   Note          Q1        Q1
    Quarters ended April 2 and                                2011    2010(1)
     March 27 (US $ millions)
    -------------------------------------------------------------------------
    CASH PROVIDED BY (USED FOR):
    Operating Activities
    Earnings                                              $     (2) $     (7)
    Items not affecting cash:
      Depreciation                                              14        11
      Deferred income tax                                       (4)       (4)
    Other items                                                  3         3
    -------------------------------------------------------------------------
                                                                11         3
    Net change in non-cash operating working
     capital balances                              11          (45)      (50)
    Net change in tax receivable                                 1        57
    -------------------------------------------------------------------------
                                                               (33)       10
    -------------------------------------------------------------------------
    Investing Activities
    Investment in property, plant and equipment                 (8)       (1)
    Realized net investment hedge gain             13            1         1
    Other                                                        2         -
    -------------------------------------------------------------------------
                                                                (5)        -
    -------------------------------------------------------------------------
    Financing Activities
    Accounts receivable securitization program
     proceeds (repayments)                                      10        (8)
    Revolving bank lines repaid                     7            -        (9)
    -------------------------------------------------------------------------
                                                                10       (17)
    -------------------------------------------------------------------------
    Cash and Cash Equivalents
    Decrease                                                   (28)       (7)
    Balance, beginning of period                               111        20
    -------------------------------------------------------------------------
    Balance, end of period                          11    $     83 $      13
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to Note 3 for effects of adoption of IFRS
    (See accompanying notes)
    >>

Notes to the Consolidated Financial Statements

    <<
    (unaudited)
    (in US $, unless otherwise noted)
    >>

In these notes, "Norbord" means Norbord Inc. and all of its consolidated subsidiaries and affiliates, and "Company" means Norbord Inc. as a separate corporation, unless the context implies otherwise. "Brookfield" means Brookfield Asset Management Inc. or any of its consolidated subsidiaries and affiliates, a related party, by virtue of a controlling equity interest in the Company.

NOTE 1. NATURE AND DESCRIPTION OF THE COMPANY

Norbord Inc. (the "Company") is an international producer of wood-based panels with 13 plant locations in the United States, Europe and Canada. Norbord is a publicly traded company listed on the Toronto Stock Exchange under the symbols NBD and NBD.WT. The Company is incorporated under the Canada Business Corporations Act and is headquartered in Toronto, Ontario, Canada.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of Compliance

These consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Statements, ("IAS 34") as issued by the International Accounting Standards Board ("IASB") and using the accounting policies the Company expects to adopt in its consolidated financial statements as at and for the year ending December 31, 2011.

As these interim financial statements are the Company's first financial statements prepared using International Financial Reporting Standards ("IFRS"), certain disclosures that are required to be included in annual financial statements prepared in accordance with IFRS that were not included in the Company's 2010 annual financial statements prepared in accordance with Canadian Generally Accepted Accounting Principles ("Canadian GAAP") have been included in these financial statements for the comparative annual period.

These interim financial statements should be read in conjunction with the Company's 2010 annual financial statements and in consideration of the IFRS transition disclosures included in Note 3 to these financial statements and additional annual disclosures included herein.

These financial statements were authorized for issuance by the Board of Directors of the Company on April 27, 2011.

(b) Basis of Presentation

These consolidated interim financial statements include the accounts of the Company and all its wholly-owned subsidiaries and a jointly controlled entity, which is accounted for using the equity method. Effective December 2010, the joint venture, which was non-core and represented less than 1% of total assets, ceased operations.

(c) Foreign Currency Translation

The U.S. dollar is the functional and presentation currency of the Company. Each of the Company's subsidiaries determines its functional currency and items included in the financial statements of each subsidiary are measured using that functional currency.

Assets and liabilities of foreign operations having a functional currency other than the U.S. dollar are translated at the rate of exchange prevailing at the reporting date and revenues and expenses at average rates during the period. Gains or losses on translation are included as a component of shareholders' equity in other comprehensive income. Gains or losses on foreign currency denominated balances and transactions that are designated as hedges of net investments in these operations are reported in the same manner.

Foreign currency denominated monetary assets and liabilities of the Company and its subsidiaries are translated using the rate of exchange prevailing at the reporting date. Revenue and expenses are measured at average rates during the period. Gains or losses on translation of these items are included in earnings. Gains or losses on transactions which hedge these items are also included in earnings. Foreign currency denominated non-monetary assets and liabilities, measured at historic cost, are translated at the rate of exchange at the transaction date. Foreign exchange gains or losses arising from monetary assets or liabilities to a foreign operation, the settlement of which is neither planned nor likely to occur in the foreseeable future and which in substance is considered to form part of the net investment in the foreign operation, are recognized in other comprehensive income.

(d) Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits and investment grade money market securities and bank term deposits with maturities of 90 days or less from the date of purchase. Cash and cash equivalents are recorded at cost, which approximates market value.

(e) Inventories

Inventories of finished goods, raw materials and operating and maintenance supplies are valued at the lower of cost and net realizable value, with cost determined on an average cost basis. The cost of finished goods inventories includes direct material, direct labour and an allocation of overhead.

(f) Property, Plant and Equipment

Property, plant and equipment are recorded at cost less accumulated depreciation. Property and plant includes land and buildings. Buildings are depreciated on a straight-line basis over 20 to 40 years. Production equipment is depreciated using the units of production basis. This method amortizes the cost of equipment over the estimated units that will be produced during its estimated useful life, which ranges from 10 to 25 years. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The rates of depreciation are intended to fully depreciate manufacturing and non-manufacturing assets over their useful lives. These periods are assessed at least annually to ensure that they continue to approximate the useful lives of the related assets.

Property, plant and equipment is tested for impairment only when there is an indication of impairment. Impairment testing is a one-step approach for both testing and measurement, with the carrying value of the asset or group of assets compared directly to the higher of fair value less costs to sell, and value in use. Fair value is measured at the sales price of the asset or group of assets in an arm's length transaction. Value in use is based on the discounted future cash flows of the asset or group of assets. The projection of future cash flows take into account the relevant operating plans and management's best estimate of the most probable set of conditions anticipated to prevail. Where an impairment loss exists, it is recorded against earnings. If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the lesser of the revised estimate of recoverable amount and the carrying value that would have remained had no impairment loss been recognized previously. IFRS requires such reversals to be recognized in earnings if certain criteria are met.

(g) Employee Future Benefits

Norbord sponsors various defined benefit and defined contribution pension plans, which cover substantially all employees and are funded in accordance with applicable plan and regulatory requirements. The benefits under Norbord's defined benefit pension plans are generally based on an employee's length of service and the final five years' average salary, and the plans do not provide for indexation of benefit payments.

The measurement date for all defined benefit pension plans is December 31. The obligations associated with Norbord's defined benefit pension plans are actuarially valued using the projected unit credit method, management's best estimate assumptions for long-term expected rate of return on assets, salary escalation, life expectancy, and a current market discount rate. For the purpose of calculating the expected return on plan assets, those assets are measured at fair value. The obligation in excess of plan assets is recorded as a liability. All actuarial gains or losses are recognized immediately as a component of shareholders' equity in other comprehensive income.

(h) Financial Instruments

The Company utilizes derivative financial instruments solely to manage its foreign currency, interest rate and commodity price exposures in the ordinary course of business. Derivatives are not used for trading or speculative purposes. All hedging relationships, risk management objectives and hedging strategies are formally documented and periodically assessed to ensure that the changes in the value of these derivatives are highly effective in offsetting changes in the fair values, net investments or cash flows of the hedged exposures. Accordingly, all gains and losses (realized and unrealized, as applicable) on such derivatives are recognized in the same manner as gains and losses on the underlying exposure being hedged. Any resulting carrying amounts are included in other assets if there is an unrealized gain on the derivative, or in other liabilities if there is an unrealized loss on the derivative.

The fair values of the Company's derivative financial instruments are determined by using observable market inputs for identical assets and liabilities. These fair values reflect the estimated amount that the Company would have paid or received if required to settle all outstanding contracts at period end. This fair value represents a point-in-time estimate that may not be relevant in predicting the Company's future earnings or cash flows.

The Company is exposed to credit risk in the event of non-performance by its derivative counterparties. However, the Company's Board-approved financial policies require that derivative transactions be executed only with approved, highly rated counterparties under master netting agreements; therefore, the Company does not anticipate any non-performance. The fair value measurements of the Company's derivative financial instruments are classified as Level 2 of a three-level hierarchy as fair value of these derivative instruments is based on observable market inputs.

The carrying value of the Company's non-derivative financial instruments approximates fair value, except where disclosed in these notes. Fair values disclosed are determined using actual quoted market prices or, if not available, indicative prices based on similar publicly-traded instruments.

(i) Debt Issue Costs

The Company accounts for transaction costs that are directly attributable to the issuance of long-term debt by deducting such costs from the carrying value of the long-term debt. The capitalized transaction costs are amortized to interest expense over the term of the related long-term debt.

(j) Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In addition, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the year of enactment or substantive enactment. The Company assesses recoverability of deferred tax assets based on the Company's estimates and assumptions. Deferred tax assets are recorded at an amount that the Company considers probable to be realized.

The Company has certain non-monetary assets and liabilities for which the tax reporting currency is different from its functional currency. Any translation gains or losses arising on the remeasurement of these items at current exchange rates versus historic exchange rates that give rise to a temporary difference is recorded as a deferred tax asset or liability.

(k) Share-Based Payments

The Company issues share-based awards in the form of stock options to certain employees that vest evenly over a five-year period. The fair value of the options on the grant date is determined using a fair value model (Black-Scholes option pricing model). Each tranche of the award is considered to be a separate grant based on its respective vesting period. The fair value of each tranche is determined separately on the date of grant and recognized as compensation expense, net of forfeiture estimate, over the term of its respective vesting period, with a corresponding increase to contributed surplus.

(l) Warrants

The Company measures warrants at the issue date using the Black-Scholes option pricing model, reduced by any related issue costs.

(m) Revenue Recognition

Sales are recognized when the risks and rewards of ownership pass to the purchaser. This is generally when goods are shipped. Sales are recorded net of discounts.

Sales are governed by contract or by standard industry terms. Revenue is not recognized prior to the completion of those terms. The majority of product is shipped via third-party transport on a freight-onboard shipping point basis. In all cases, product is subject to quality testing by the Company to ensure it meets applicable standards prior to shipment.

(n) Critical Judgements and Estimates

The preparation of the consolidated financial statements in conformity with IFRS, requires management to make critical judgements and estimates that affect the reported amounts of assets, liabilities, revenues, expenses, and disclosure of contingent assets and liabilities. Actual results could materially differ from those estimates.

In making estimates and judgements, management relies on external information and observable conditions where possible, supplemented by internal analysis as required. These estimates and judgements have been applied in a manner consistent with prior periods and there are no known trends, commitments, events or uncertainties that we believe will materially affect the methodology or assumptions utilized in making these estimates and judgements in these financial statements. The significant estimates and judgements used in determining the recorded amount for assets and liabilities in the financial statements include the following:

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    (i)   Inventory
    Norbord estimates the net realizable value of its inventory using
    estimates regarding future selling prices.

    (ii)   Property, Plant and Equipment
    When determining the value in use of property, plant and equipment, the
    Company uses the following critical estimates: the timing of forecasted
    revenues; future selling prices and margins; future sales volumes;
    maintenance and other capital expenditures; discount rates; useful lives;
    and residual values.

    (iii)  Employee Benefit Expense
    The net obligations associated with the defined benefit pension plans are
    actuarially valued using the projected unit credit method; management's
    best estimates for long-term expected rate of return on assets; salary
    escalation; life expectancy; and a current market discount rate.

    (iv)   Income Taxes
    Current income tax assets and liabilities are measured at the amount
    expected to be paid to tax authorities, net of recoveries, based on the
    tax rates and laws enacted or substantively enacted at the balance sheet
    date. Current income tax relating to items recognized directly in
    shareholders' equity is also recognized directly in shareholders' equity.

    In accordance with IFRS, the Company uses the asset and liability method
    of accounting for deferred income taxes and provide for deferred income
    taxes for all significant differences between the tax bases and carrying
    amounts of assets and liabilities. Deferred income tax assets are
    recognized for all deductible temporary differences, carry forward of
    unused tax credits and unused tax losses, to the extent that it is
    probable that deductions, tax credits and tax losses can be utilized. The
    carrying amount of deferred income tax assets are reviewed at each
    balance sheet date and reduced to the extent it is no longer probable
    that the income tax asset will be recovered. Deferred income tax assets
    and liabilities are measured at the tax rates that are expected to apply
    to the year when the asset is realized or the liability settled, based on
    the tax rates and laws that have been enacted or substantively enacted at
    the balance sheet date.

    Judgement is required in determining the provision for income taxes,
    deferred tax assets and liabilities and any related valuation allowance.
    To the extent a valuation allowance is created or revised, current period
    earnings or other comprehensive income will be affected. In the normal
    course of operations, judgement is required to assess tax
    interpretations, regulations and legislation, which are continually
    changing to ensure liabilities are complete and to ensure assets net of
    valuation allowances are realizable. There can be no assurance that the
    tax authorities will not challenge the Company's filing positions.

    (v)    Financial Instruments
    The critical assumptions and estimates used in determining the fair value
    of financial instruments are: equity and commodity prices; future
    interest rates; the relative credit worthiness of the Company to its
    counterparties; estimated future cash flows; discount rates and
    volatility utilized in option valuations.
    >>

(o) Future Changes in Accounting Policies

    <<
    (i)    Transfers of Financial Assets
    In October 2010, the IASB amended IFRS 7, Financial Instruments:
    Disclosures and added additional disclosure requirements for financial
    assets that have been transferred but not derecognized in accordance with
    IAS 39, Financial Instruments: Recognition and Measurement ("IAS 39").
    The amendments are effective for annual periods beginning on or after
    July 1, 2011, so will be effective for the year ending December 31, 2012.
    The Company is currently assessing the impact of these amendments on its
    financial statements.

    (ii)   Financial Instruments
    IFRS 9, Financial Instruments ("IFRS 9") was issued by the IASB on
    November 12, 2009 and will replace IAS 39. IFRS 9 uses a single approach
    to determine whether a financial asset is measured at amortized cost or
    fair value, replacing the multiple rules in IAS 39. The approach in IFRS
    9 is based on how an entity manages its financial instruments in the
    context of its business model and the contractual cash flow
    characteristics of the financial assets. The new standard also requires a
    single impairment method to be used, replacing the multiple impairment
    methods in IAS 39. IFRS 9 is effective for annual periods beginning on or
    after January 1, 2013, so will be effective for the year ending December
    31, 2013. The Company has not yet determined the impact of IFRS 9 on its
    financial statements.
    >>

NOTE 3. TRANSITION TO IFRS

The Company has adopted IFRS effective January 1, 2011. Prior to the adoption of IFRS the Company prepared its financial statements in accordance with Canadian GAAP. The Company's financial statements for the year ending December 31, 2011 will be the first annual financial statements that comply with IFRS. Accordingly, the Company will make an unreserved statement of compliance with IFRS beginning with its 2011 annual financial statements. The Company's transition date is January 1, 2010 (the "transition date") and the Company has prepared its opening IFRS balance sheet as at that date. These financial statements have been prepared in accordance with the accounting policies described in Note 2. The Company will ultimately prepare its opening balance sheet and financial statements for 2010 and 2011 by applying existing IFRS with an effective date of December 31, 2011 or prior. Accordingly, the opening balance sheet and financial statements for 2010 and 2011 may differ from these financial statements.

(a) Elected exemptions from full retrospective application

In preparing these consolidated financial statements in accordance with IFRS 1 First-time Adoption of International Financial Reporting Standards ("IFRS 1"), the Company has elected certain optional exemptions from the full retrospective application of IFRS. The optional exemptions applied are described below.

    <<
    (i)    Measurement of Assets and Liabilities
    The Company's majority shareholder, Brookfield, was granted exemptive
    relief by the Canadian Securities Administrators to prepare its financial
    statements in accordance with IFRS one year earlier than required for
    Canadian publicly accountable enterprises, which is effectively one year
    earlier than Norbord's transition date. IFRS 1 provides an exemption that
    permits a subsidiary to measure its assets and liabilities at the
    carrying amounts included in its parent company's financial statements.
    The Company has elected this exemption. Therefore, the Company has used
    the measurement of its assets and liabilities as of January 1, 2009 -
    that was included in Brookfield's financial statements for Brookfield's
    transition - as the basis for the measurement of the Company's assets and
    liabilities upon its transition to IFRS. As a result, the Company has
    applied the same exemptions and elections as Brookfield.

    (ii)   Fair Value as Deemed Cost
    IFRS 1 allows an entity to initially measure an item of property, plant
    and equipment upon transition to IFRS at fair value, as opposed to
    recreating depreciated cost under IFRS. The Company has used fair value
    as deemed cost for property, plant and equipment, which has resulted in
    carrying values under IFRS that are different than those under Canadian
    GAAP. This change in carrying value is the result of the change in value
    of such assets in aggregate since acquisition.

    (iii)  Cumulative Translation Differences
    IAS 21, The Effects of Changes in Foreign Exchange Rates, requires a
    company to determine the translation differences in accordance with IFRS
    from the date on which a subsidiary was formed or acquired. IFRS 1 allows
    cumulative translation differences for all foreign operations to be
    deemed zero at the date of transition to IFRS, with future gains or
    losses on subsequent disposal of any foreign operations to exclude
    translation differences arising prior to the date of transition to IFRS.
    The Company has reset all cumulative translation differences to zero as
    at January 1, 2009.

    (iv)   Employee Benefits
    IAS 19, Employee Benefits ("IAS 19"), allows certain actuarial gains and
    losses to be either deferred and amortized or recognized immediately
    through shareholders' equity. On adoption of IFRS, the Company has
    elected to record all deferred actuarial gains and losses through
    shareholders' equity.

    (v)    Share-Based Payments
    On adoption of IFRS, under IFRS 1, an entity is not required to recognize
    share-based payments settled before the entity's IFRS transition date.
    IFRS 1 encourages, but does not require, application of its provisions to
    equity instruments granted on or before November 7, 2002. The Company has
    recognized, under IFRS 2, Share-based Payment ("IFRS 2"), all share-based
    awards that were recognized under Canadian GAAP.
    >>

IFRS 1 allows for certain other optional exemptions; however, such exemptions are not significant to the Company's adoption of IFRS.

(b) Mandatory exceptions to retrospective application

In preparing these consolidated financial statements in accordance with IFRS 1 the Company has applied certain mandatory exceptions from full retrospective application of IFRS. The mandatory exceptions applied from full retrospective application of IFRS are described below.

    <<
    (i)    Hedge Accounting
    Only hedging relationships that satisfied the hedge accounting criteria
    as of the transition date are reflected as hedges in the Company's
    results under IFRS.

    (ii)   Estimates
    Hindsight was not used to create or revise estimates and accordingly the
    estimates previously made by the Company under Canadian GAAP are
    consistent with their application under IFRS.
    >>

(c) Reconciliation of Shareholders' Equity as Reported Under Canadian GAAP to IFRS

The following is a reconciliation of the Company's shareholders' equity reported in accordance with Canadian GAAP to its shareholders' equity in accordance with IFRS at the transition date (January 1, 2010). For additional disclosure, Canadian GAAP to IFRS adjustments to shareholders' equity on Brookfield's transition date (January 1, 2009) are also presented, as the Company elected to measure assets and liabilities as of that date.

    <<
    -------------------------------------------------------------------------
                                                       Accumulated
                                                             Other
                                       Contrib-             Compre-
    Shareholders' Equity       Share      uted  Retained   hensive
    (US $ millions)          Capital   Surplus  Earnings    Income     Total
    -------------------------------------------------------------------------
    As reported under
     Canadian GAAP -
     Jan 1, 2010             $   335   $    39   $   (32)  $    (8)  $   334

    IFRS adjustments at
     measurement date -
     Jan 1, 2009(1)
      (i)   Employee benefits      -         -       (14)        -       (14)
      (ii)  Property, plant
             and equipment
              Deemed cost
               adjustment (net)    -         -         -         -         -
      (iii) Consistency in
             accounting
             policies              -         -         4         -         4
      (iv)  Share-based
             compensation          -         1        (1)        -         -
      (v)   Deferred income
             tax                   -         -        (7)        -        (7)
      (vi)  Cumulative
             translation
             account               -         -       (13)       13         -
    -------------------------------------------------------------------------
                                   -         1       (31)       13       (17)
    IFRS adjustments - year
     ended Dec 31, 2009(1)
      (i)   Employee benefits      -         -        (1)       (3)       (4)
      (ii)  Property, plant
             and equipment
              Depreciation on
               deemed cost
               adjustment          -         -        (4)        -        (4)
      (iii) Consistency in
             accounting
             policies              -         -         -         1         1
      (v)   Deferred income
             tax                   -         -        11         -        11
    -------------------------------------------------------------------------
                                   -         -         6        (2)        4
    -------------------------------------------------------------------------

    Total IFRS adjustments -
     Jan 1, 2010             $     -   $     1   $   (25)  $    11   $   (13)
    -------------------------------------------------------------------------
    As reported under IFRS -
     Jan 1, 2010             $   335   $    40   $   (57)  $     3   $   321
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to Notes for Canadian GAAP to IFRS Reconciliations
    >>

The following is a reconciliation of the Company's shareholders' equity reported in accordance with Canadian GAAP to its shareholders' equity in accordance with IFRS at March 27, 2010:

    <<
    -------------------------------------------------------------------------
                                                       Accumulated
                                                             Other
                                       Contrib-             Compre-
    Shareholders' Equity       Share      uted  Retained   hensive
    (US $ millions)          Capital   Surplus  Earnings    Income     Total
    -------------------------------------------------------------------------
    As reported under
     Canadian GAAP -
     Mar 27, 2010            $   335   $    39   $   (37)  $   (15)  $   322

    IFRS adjustments(1)
      (i)   Employee benefits      -         -       (15)       (6)      (21)
      (ii)  Property, plant
             and equipment
              Depreciation on
               deemed cost
               adjustment          -         -        (5)        -        (5)
              Foreign exchange
               on deemed cost
               adjustment          -         -         -         1         1
      (iii) Consistency in
             accounting
             policies              -         -         3         1         4
      (iv)  Share-based
             compensation          -         1        (1)        -         -
      (v)   Deferred income
             tax                   -         -         4         1         5
      (vi)  Cumulative
             translation
             account               -         -       (13)       13         -
    -------------------------------------------------------------------------
                             $     -   $     1   $   (27)  $    10   $   (16)
    -------------------------------------------------------------------------
    As reported under IFRS -
     Mar 27, 2010            $   335   $    40   $   (64)  $    (5)  $   306
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to Notes for Canadian GAAP to IFRS Reconciliations
    >>

The following is a reconciliation of the Company's shareholders' equity reported in accordance with Canadian GAAP to its shareholders' equity in accordance with IFRS at December 31, 2010:

    <<
    -------------------------------------------------------------------------
                                                       Accumulated
                                                             Other
                                       Contrib-             Compre-
    Shareholders' Equity       Share      uted  Retained   hensive
    (US $ millions)          Capital   Surplus  Earnings    Income     Total
    -------------------------------------------------------------------------
    As reported under
     Canadian GAAP -
     Dec 31, 2010            $   340   $    40   $   (15)  $   (13)  $   352

    IFRS adjustments(1)
      (i)   Employee benefits      -         -       (15)      (13)      (28)
      (ii)  Property, plant
             and equipment
              Depreciation on
               deemed cost
               adjustment          -         -       (10)        -       (10)
              Foreign exchange
               on deemed cost
               adjustment          -         -         -         3         3
      (iii) Consistency in
             accounting
             policies              -         -         4         1         5
      (iv)  Share-based
             compensation          -         1        (1)        -         -
      (v)   Deferred income
             tax                   -         -         6         3         9
      (vi)  Cumulative
             translation
             account               -         -       (13)       13         -
    -------------------------------------------------------------------------
                             $     -   $     1   $   (29)  $     7   $   (21)
    -------------------------------------------------------------------------
    As reported under IFRS -
     Dec 31, 2010            $   340   $    41   $   (44)  $    (6)  $   331
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to Notes for Canadian GAAP to IFRS Reconciliations
    >>

(d) Reconciliation of Earnings as Reported Under Canadian GAAP to IFRS

The following is a reconciliation of the Company's earnings reported in accordance with Canadian GAAP to its earnings in accordance with IFRS for the year ended December 31, 2010 and the three month period ended March 27, 2010.

    <<
    -------------------------------------------------------------------------
                                                             Three
                                                            months      Year
                                                             ended     ended
                                                            Mar 27,   Dec 31,
    (US $ millions)                                           2010      2010
    -------------------------------------------------------------------------
    Earnings as reported under Canadian GAAP              $     (5) $     17

    IFRS adjustments(1)
      (ii)  Property, plant and equipment
              Depreciation on deemed cost adjustment            (1)       (6)
      (iii) Consistency in accounting policies                  (1)        -
      (v)   Deferred income tax                                  -         2
    -------------------------------------------------------------------------
                                                                (2)       (4)
    -------------------------------------------------------------------------
    Earnings as reported under IFRS                       $     (7) $     13
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to Notes for Canadian GAAP to IFRS Reconciliations
    >>

(e) Reconciliation of Comprehensive Loss as Reported Under Canadian GAAP to IFRS

The following is a reconciliation of the Company's comprehensive loss reported in accordance with Canadian GAAP to its comprehensive loss in accordance with IFRS for the year ended December 31, 2010 and the three month period ended March 27, 2010.

    <<
    -------------------------------------------------------------------------
                                                             Three
                                                            months      Year
                                                             ended     ended
                                                            Mar 27,   Dec 31,
    (US $ millions)                                           2010      2010
    -------------------------------------------------------------------------
    Comprehensive loss as reported under Canadian GAAP    $    (12) $     (5)

    IFRS adjustments(1)
      Differences in Canadian GAAP to IFRS earnings
       noted in 3(d)                                            (2)       (4)
        (i)  Employee benefits                                  (3)      (10)
        (ii) Property, plant and equipment
               Foreign exchange on deemed cost
                adjustment                                       1         3
        (v)  Deferred income tax                                 1         3
    -------------------------------------------------------------------------
                                                                (3)       (8)
    -------------------------------------------------------------------------
    Comprehensive loss as reported under IFRS             $    (15) $    (13)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to Notes for Canadian GAAP to IFRS Reconciliations
    >>

(f) Reconciliation of Total Assets, Liabilities and Shareholders' Equity as Reported Under Canadian GAAP to IFRS

The following is a reconciliation of the Company's total assets, liabilities and shareholders' equity reported in accordance with Canadian GAAP to its total assets, liabilities and shareholders' equity in accordance with IFRS as at the transition date (January 1, 2010):

    <<
    -------------------------------------------------------------------------
                                                             Total     Share-
                                                   Total    Liabil-  holders'
    (US $ millions)                               Assets     ities    Equity
    -------------------------------------------------------------------------
    As reported under Canadian GAAP -
     Dec 31, 2009                               $  1,043  $    709  $    334

    IFRS adjustments(1)
      (i)    Employee benefits                         -        18       (18)
      (ii)   Property, plant and equipment            (4)        -        (4)
      (iii)  Consistency in accounting policies        5         -         5
      (v)    Deferred income tax                       -        (4)        4
      (vii)  Accounts receivable securitization       62        62         -
      (viii) Investment in joint venture              (1)       (1)        -
    -------------------------------------------------------------------------
                                                $     62  $     75  $    (13)
    -------------------------------------------------------------------------
    As reported under IFRS - Jan 1, 2010        $  1,105  $    784  $    321
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to Notes for Canadian GAAP to IFRS Reconciliations
    >>

The following is a reconciliation of the Company's assets, liabilities and shareholders' equity reported in accordance with Canadian GAAP to its assets, liabilities and shareholders' equity in accordance with IFRS as at December 31, 2010:

    <<
    -------------------------------------------------------------------------
                                                             Total     Share-
                                                   Total    Liabil-  holders'
    (US $ millions)                               Assets     ities    Equity
    -------------------------------------------------------------------------
    As reported under Canadian GAAP -
     Dec 31, 2010                               $  1,062  $    710  $    352

    IFRS adjustments (1)
      (i)    Employee benefits                         -        28       (28)
      (ii)   Property, plant and equipment            (7)        -        (7)
      (iii)  Consistency in accounting policies        5         -         5
      (v)    Deferred income tax                       -        (9)        9
      (vii)  Accounts receivable securitization       60        60         -
      (viii) Investment in joint venture              (2)       (2)        -
    -------------------------------------------------------------------------
                                                $     56  $     77  $    (21)
    -------------------------------------------------------------------------
    As reported under IFRS - Dec 31, 2010       $  1,118  $    787  $    331
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to Notes for Canadian GAAP to IFRS Reconciliations
    >>

(g) Reconciliation of Cash Flows as Reported Under Canadian GAAP to IFRS

There were no material adjustments to the cash flow statement as a result of the conversion to IFRS.

Notes for Canadian GAAP to IFRS Reconciliations

    <<
    (i)    Employee Benefits

           Unfunded Pension Obligation
           Under Canadian GAAP, accrued pension benefit obligation in excess
           of plan assets for defined benefit pension plans only required
           disclosure in the notes to the consolidated financial statements.
           Under IAS 19, the obligation in excess of plan assets is recorded
           as a liability on the balance sheet.

           Actuarial Gains and Losses
           Under Canadian GAAP actuarial gains and losses were recognized in
           earnings on a systematic and consistent basis, subject to a
           minimum required amortization based on a "corridor" approach.
           Unrecognized actuarial gains and losses below the corridor were
           deferred. Under IFRS, in accordance with the Company's IFRS 1
           election, any deferred actuarial gains and losses as at the
           Company's IFRS measurement date of January 1, 2009, Brookfield's
           IFRS transition date, were recognized immediately through a
           component of shareholders' equity in retained earnings.
           Post-adoption, the Company elected to recognize all actuarial
           gains and losses immediately as a component of shareholders'
           equity in other comprehensive income.

    (ii)   Plant, Property and Equipment

           Deemed Cost
           Upon transition to IFRS, the Company elected to measure its
           property, plant and equipment at fair value as its deemed cost.
           Certain items of property, plant and equipment in the North
           American operations had a fair value of $30 million above their
           book value under Canadian GAAP and certain items of property,
           plant and equipment in the European operations had a fair value of
           $30 million below their book value under Canadian GAAP. The net
           effect of these fair value measurements was nil on a consolidated
           basis on January 1, 2009. The fair value measurement was based on
           January 1, 2009. The Company determined the fair value of certain
           items of property, plant and equipment using an income approach.
           Fair value measurements were prepared internally using a
           discounted cash flow model taking into consideration forecasts and
           assumptions of future cash flows and a discount rate based on the
           Company's weighted average cost of capital as at the measurement
           date. All subsequent depreciation under IFRS is based on this
           deemed cost.

           Component Accounting
           Both IFRS and Canadian GAAP require property, plant and equipment
           to be disaggregated into components and depreciated separately.
           Under Canadian GAAP, component accounting was interpreted and
           applied more generally. The Company has applied the guidance under
           IFRS, IAS 16, Property, Plant and Equipment, and disaggregated its
           property, plant and equipment into components and reviewed the
           useful life of each separable component. For certain components of
           property, plant & equipment, useful lives were reassessed and the
           effect of these changes in estimates will accelerate the expected
           depreciation expense under IFRS.

           Impairments
           Under both Canadian GAAP and IFRS, an asset or group of assets is
           tested for impairment only when there is an indication of
           impairment. Under Canadian GAAP, impairment testing of an asset or
           group of assets is a two-step approach: first, the carrying value
           of an asset or group of assets is compared to the undiscounted
           future cash flows to determine whether impairment exists. If
           impairment exists, then the second step is the measurement of the
           impairment by comparing the carrying value of the asset or group
           of assets to their fair value, as calculated using the present
           value of future cash flows. Under IFRS, IAS 36, Impairment of
           Assets, impairment testing is a one-step approach for both testing
           and measurement, with the carrying value of the asset or group of
           assets compared directly with the higher of fair value less costs
           to sell and value in use. Fair value is measured at the sales
           price of the asset or group of assets in an arm's length
           transaction. Value in use is based on the discounted future cash
           flows of the asset or group of assets. This may potentially result
           in write-downs where the carrying value of an asset or group of
           assets was previously supported under Canadian GAAP on an
           undiscounted cash flow basis. Furthermore, while Canadian GAAP
           prohibits the reversals of impairment losses recognized in prior
           periods, IFRS requires such reversals to be recognized if certain
           criteria are met.

           The Company assessed impairment under IFRS for property, plant and
           equipment as at December 31, 2010 and December 31, 2009, and
           concluded no impairment existed.

    (iii)  Consistency in Accounting Policies

           IFRS requires consistency of accounting policies across
           subsidiaries. The Company aligned the accounting policies of all
           of its subsidiaries under IFRS resulting in an adjustment on the
           Company's IFRS measurement date of January 1, 2009 and in
           subsequent periods.

    (iv)   Share-Based Payments

           The Company issues share-based awards in the form of stock options
           that vest evenly over a five-year period. Under Canadian GAAP, the
           Company recognized the fair value of the award, determined at the
           time of the grants, on a straight-line basis over the five-year
           vesting period. Under IFRS 2, the fair value of each tranche of
           the award is considered to be a separate grant based on its
           vesting period. The fair value of each tranche is determined
           separately and recognized as compensation expense over the term of
           its respective vesting period. Accordingly, compensation expense
           under IFRS will be recognized at an accelerated rate compared to
           under Canadian GAAP.

    (v)    Income Taxes

           Tax Effect of IFRS Accounting Adjustments
           Deferred income tax is adjusted to reflect the change in temporary
           differences resulting from the IFRS adjustments described above.

           Translation of Non-Monetary Assets and Liabilities
           The Company has certain non-monetary assets and liabilities for
           which the tax reporting currency is different from its functional
           currency. Under Canadian GAAP, any translation gains or losses
           arising on the remeasurement of these items at current exchange
           rates versus historic exchange rates do not give rise to a
           deferred income tax asset or liability. Under IFRS, IAS 12, Income
           Taxes, such translation gains or losses do give rise to a
           temporary difference that is recorded as a deferred tax asset or
           liability.

    (vi)   Cumulative Translation Account

           Upon transition to IFRS, Norbord elected under IFRS 1 to reset all
           cumulative translation differences to zero.

    (vii)  Accounts Receivable Securitization

           Under Canadian GAAP, the Company's accounts receivable
           securitization program was treated as a true sale of accounts
           receivable and the receivables were derecognized as the Company
           had transferred substantially all of its present and future trade
           accounts receivable to a third party trust sponsored by a highly
           rated Canadian financial institution, on a fully serviced basis,
           for proceeds consisting of cash and deferred purchase price. Under
           IAS 39, the securitization program does not meet the criteria for
           a sale transaction and is treated as a financing arrangement.
           Accordingly an adjustment to the balance sheet to gross-up
           accounts receivable and long-term debt is required.

    (viii) Investment in a Joint Venture

           The Company has a 50% interest in a joint-venture hardwood plywood
           business which ceased operations effective December 2010. This
           operation was non-core and represented less than 1% of total
           assets. Under Canadian GAAP, the Company proportionately
           consolidated its 50% interest in the joint venture in the
           consolidated financial statements. Under IAS 31, Interests in
           Joint Ventures, the Company elected to account for its investment
           under the equity method.

    (ix)   Revenue recognition

           Under Canadian GAAP, the Company presented outbound freights costs
           as a reduction of sales. Under IFRS, IAS 18, Revenues, the Company
           revenues should only take into account trade discounts and volume
           rebates. As a consequence, the Company has presented sales
           exclusive of outbound freight costs.
    >>

NOTE 4. ACCOUNTS RECEIVABLE

The Company has an $85 million accounts receivable securitization program with a third party trust sponsored by a highly rated Canadian financial institution. The program has an evergreen commitment subject to termination on twelve months notice. Under the program, Norbord has transferred substantially all of its present and future trade accounts receivable to the financial institution, on a fully serviced basis, for proceeds consisting of cash and deferred purchase price. However, the asset derecognition criteria have not been met and the transferred accounts receivables remain recorded as an asset.

At period end, Norbord recorded cash proceeds of $69 million (December 31, 2010 - $60 million; January 1, 2010 - $62 million) relating to this program. The cash proceeds are presented as other long-term debt on the balance sheet and are excluded from the net debt to capitalization calculation for financial covenant purposes (Note 12).

The securitization program contains no financial covenants however the program is subject to minimum credit-rating requirements. The Company must maintain a long-term issuer credit rating of at least single B (mid) or the equivalent. As at April 27, 2011, Norbord's ratings were BB (low) (DBRS), BB- (Standard & Poor's) and Ba3 (Moody's).

NOTE 5. INVENTORY

    <<
    -------------------------------------------------------------------------
                                                   Apr 2    Dec 31     Jan 1
    (US $ millions)                                 2011      2010      2010
    -------------------------------------------------------------------------
    Raw materials                               $     34  $     18  $     11
    Finished goods                                    39        38        32
    Operating and maintenance supplies                29        28        29
    -------------------------------------------------------------------------
                                                $    102  $     84  $     72
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

At period end, the provision to reflect inventories at the lower of cost and net realizable value was $1 million (December 31, 2010 - less than $1 million; January 1, 2010 - $1 million).

The amount of inventory recognized as an expense was as follows:

    <<
    -------------------------------------------------------------------------
    (US $ millions)                                        Q1 2011   Q1 2010
    -------------------------------------------------------------------------
    Cost of inventories                                   $    226  $    184
    Depreciation on property, plant & equipment                 14        11
    -------------------------------------------------------------------------
                                                          $    240  $    195
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

NOTE 6. OTHER ASSETS

    <<
    -------------------------------------------------------------------------
                                                   Apr 2    Dec 31     Jan 1
    (US $ millions)                                 2011      2010      2010
    -------------------------------------------------------------------------
    Unrealized interest rate swap gains
     (note 13)                                  $      4  $      5  $      4
    Unrealized monetary hedge gains (note 13)          1         2         -
    Unrealized net investment hedge gains
     (note 13)                                         -         3         2
    Other                                              -         3         8
    -------------------------------------------------------------------------
                                                $      5  $     13  $     14
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Unrealized interest rate swap gains, unrealized monetary hedge gains and the unrealized net investment hedge gains are offset by unrealized losses on the underlying exposures being hedged.

NOTE 7. LONG-TERM DEBT

    <<
    -------------------------------------------------------------------------
                                                   Apr 2    Dec 31     Jan 1
    (US $ millions)                                 2011      2010      2010
    -------------------------------------------------------------------------
    Principal value
    7 1/4% debentures due 2012                  $    240  $    240  $    240
    Senior notes due 2017                            200       200       200
    Revolving bank lines                               -         -        27
    -------------------------------------------------------------------------
                                                     440       440       467
    Debt issue costs                                  (5)       (5)       (6)
    Deferred interest rate swap gains                  3         3         6
    Unrealized interest rate swap gains (note 6)       4         5         4
    -------------------------------------------------------------------------
                                                $    442  $    443  $    471
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Revolving Bank Lines

Subsequent to quarter-end, the Company renewed its committed revolving bank lines, adding two new lenders and extended the maturity by one year. As a result, the Company now has a total aggregate commitment of $270 million which matures in May 2014 and bears interest at money market rates plus a margin that varies with the Company's credit rating. At period end, none of the revolving bank lines was drawn as cash, $10 million was utilized for letters of credit, and $260 million was available to support short-term liquidity requirements.

The bank lines contain two quarterly financial covenants: minimum tangible net worth of $250 million and maximum net debt to total capitalization, book basis of 60%. As a result of the bank line renewal completed in 2010, the IFRS transitional adjustments to shareholders' equity of $21 million at January 1, 2011 are added back for the purposes of the tangible net worth calculation. In addition, Accumulated Other Comprehensive Income (AOCI) is excluded from the tangible net worth calculation subsequent to January 1, 2011. Net debt includes total debt less cash and cash equivalents plus letters of credit issued. At period end, the Company's tangible net worth for financial covenant purposes was $351 million and net debt for financial covenant purposes was $367 million (Note 12). Net debt to total capitalization was 51% on a book basis.

Interest Rate Swaps

At period end, the Company had outstanding interest rate swaps of $115 million (December 31, 2010 and January 1, 2010 - $115 million). The terms of these swaps correspond to the terms of the underlying hedged debt. The unrealized interest rate swap gains are offset by unrealized losses on the underlying exposures being hedged within interest expense.

NOTE 8. OTHER LIABILITIES

    <<
    -------------------------------------------------------------------------
                                                   Apr 2    Dec 31     Jan 1
    (US $ millions)                                 2011      2010      2010
    -------------------------------------------------------------------------
    Defined benefit pension obligation          $     28  $     28  $     18
    Accrued employee benefits                          3         6         6
    Unrealized net investment hedge loss
     (note 13)                                         2         -         -
    Other liabilities                                  1         1         3
    -------------------------------------------------------------------------
                                                $     34  $     35  $     27
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

The unrealized net investment hedge loss is offset by unrealized gains on the underlying exposures being hedged.

NOTE 9. SHAREHOLDERS' EQUITY

Stock Options

In the first quarter, 0.6 million options were granted under the stock option plan. Earnings include $1 million related to stock-based compensation expense. In the first quarter, 0.1 million common shares were issued as a result of options exercised under the stock option plan for proceeds of less than $1 million.

    <<
    Accumulated Other Comprehensive (Loss) Income
    -------------------------------------------------------------------------
                                                   Apr 2    Dec 31     Jan 1
    (US $ millions)                                 2011      2010      2010
    -------------------------------------------------------------------------
    Foreign currency translation gain
     on foreign operations                      $     18  $     10  $     18
    Net loss on hedge of net investment in
     foreign operations                              (15)      (10)      (18)
    Actuarial loss on defined benefit
     pension obligation                              (10)      (12)       (3)
    Deferred income tax on the above                   6         6         6
    -------------------------------------------------------------------------
    Accumulated other comprehensive (loss)
     income                                     $     (1) $     (6) $      3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

NOTE 10. EARNINGS PER COMMON SHARE

    <<
    -------------------------------------------------------------------------
    (US $ millions, except per share information,
     unless otherwise noted)                               Q1 2011   Q1 2010
    -------------------------------------------------------------------------
    Earnings available to common shareholders             $     (2) $     (7)
    -------------------------------------------------------------------------
    Common shares (millions):
      Weighted average number of common shares outstanding    43.5      43.2
      Stock options(1)                                           -         -
      Warrants(1)                                                -         -
    -------------------------------------------------------------------------
    Diluted number of common shares                           43.5      43.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per common share:
      Basic and Diluted                                   $  (0.05) $  (0.16)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Applicable if dilutive and when the weighted average share price for
        the period was greater than the exercise price for vested stock
        options and warrants.
    >>

NOTE 11. SUPPLEMENTAL CASH FLOW INFORMATION

The net change in non-cash operating working capital balance comprises:

    <<
    -------------------------------------------------------------------------
    (US $ millions)                                        Q1 2011   Q1 2010
    -------------------------------------------------------------------------
    Cash used for
      Accounts receivable                                 $    (25) $    (13)
      Inventory                                                (17)      (23)
      Accounts payable and accrued liabilities                  (3)      (14)
    -------------------------------------------------------------------------
                                                          $    (45) $    (50)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Cash income taxes and interest comprises:

    <<
    -------------------------------------------------------------------------
    (US $ millions)                                        Q1 2011   Q1 2010
    -------------------------------------------------------------------------
    Cash taxes received, net                              $      -  $     58
    Cash interest paid                                          16        16
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Cash and cash equivalents comprises:

    <<
    -------------------------------------------------------------------------
                                                             Apr 2    Mar 27
    (US $ millions)                                           2011      2010
    -------------------------------------------------------------------------
    Cash                                                  $     37  $      9
    Cash equivalents                                            46         4
    -------------------------------------------------------------------------
                                                          $     83  $     13
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

NOTE 12. CAPITAL MANAGEMENT

Norbord's capital structure at period end consisted of the following:

    <<
    -------------------------------------------------------------------------
                                                   Apr 2    Dec 31     Jan 1
    (US $ millions)                                 2011    2010(1)   2010(1)
    -------------------------------------------------------------------------
    Long-term debt, principal value             $    440  $    440  $    467
    Less: Cash and cash equivalents                  (83)     (113)      (21)
    -------------------------------------------------------------------------
    Net debt                                         357       327       446
    Add: Letters of credit                            10        10         8
    -------------------------------------------------------------------------
    Net debt for financial covenant purposes         367       337       454
    -------------------------------------------------------------------------
    Shareholders' equity                             335       352       334
    Add: IFRS transitional adjustments                21         -         -
    Less: AOCI subsequent to January 1, 2011          (5)        -         -
    -------------------------------------------------------------------------
    Tangible net worth for financial covenant
     purposes                                        351       352       334
    -------------------------------------------------------------------------

    Total capitalization                        $    718  $    689  $    788
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net debt to capitalization, book basis           51%       49%       58%
    Net debt to capitalization, market basis         37%       35%       48%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Figures have not been restated for IFRS. Effective January 1, 2011,
        the Company negotiated the following adjustments to its covenant
        calculations as a result of the changeover to IFRS: (i) the exclusion
        of accounts receivable securitization proceeds from the net debt
        calculation; (ii) the add-back of IFRS transitional adjustments to
        shareholders' equity, as at January 1, 2011 (to a maximum of
        $30 million), for the purposes of the tangible net worth calculation;
        and (iii) the exclusion of accumulated other comprehensive income
        (AOCI) from the tangible net worth calculation, subsequent to
        January 1, 2011.
    >>

NOTE 13. FINANCIAL INSTRUMENTS

Non-Derivative Financial Instruments

The net book values and fair values of non-derivative financial instruments were as follows:

    <<
    -------------------------------------------------------------------------
                                      Apr 2 2011   Dec 31 2010    Jan 1 2010
    -------------------------------------------------------------------------
                        Financial     Net           Net           Net
                       Instrument    Book   Fair   Book   Fair   Book   Fair
    (US $ millions)     Category    Value  Value  Value  Value  Value  Value
    -------------------------------------------------------------------------
    Financial Assets:
      Cash and         Fair value
       cash          through profit
       equivalents      or loss     $  83  $  83  $ 111  $ 111  $  20  $  20
      Accounts         Loans and
       receivable     Receivables     114    114     90     90     88     88
    -------------------------------------------------------------------------
                                    $ 197  $ 197  $ 201  $ 201  $ 108  $ 108
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Financial
     Liabilities:
      Accounts
       payable
       and accrued     Amortized
       liabilities       cost       $ 165  $ 165  $ 164  $ 164  $ 139  $ 139
      Long-term        Amortized
       debt              cost         442    450    443    447    471    474
      Other long-      Amortized
       term debt         cost          69     69     60     60     62     62
      Other            Amortized
       liabilities       cost          34     34     35     35     27     27
    -------------------------------------------------------------------------
                                    $ 710  $ 718  $ 702  $ 706  $ 699  $ 702
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Derivative Financial Instruments

Information about derivative financial instruments was as follows:

    <<
    -------------------------------------------------------------------------
                          Apr 2 2011         Dec 31 2010          Jan 1 2010
    -------------------------------------------------------------------------
    (US $ millions,       Unrealized          Unrealized          Unrealized
     unless               Gain (Loss)            Gain at             Gain at
     otherwise   Notional  at Period  Notional    Period  Notional    Period
     noted)         Value      End(1)    Value     End(1)    Value     End(1)
    -------------------------------------------------------------------------
    Currency
     hedges:
      Net
       investment
        Belgium   (euro)28       $(2) (euro)40        $1  (euro)40        $1
                  (pnds               (pnds               (pnds
        UK         stlg)51         -   stlg)47         2   stlg)56         1
      Monetary
       position
      Canadian
       dollar      CAD $94         1   CAD $78         2    CAD $9         -

    Interest
     rate hedges:
      Interest
       rate swaps     $115         4      $115         5      $115         4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) The carrying values of the derivative financial instruments are
        equivalent to the unrealized gain (loss) at period end.
    >>

The gains and losses recognized on the Company's matured currency hedges were:

    <<
    -------------------------------------------------------------------------
    Periods ended April 2 and March 27 (US $ millions)     Q1 2011   Q1 2010
    -------------------------------------------------------------------------
      Net investment
        Belgium                                           $      1  $      -
        UK                                                       -         1
      Monetary position
        Canadian Dollar                                          4         -
    -------------------------------------------------------------------------
                                                          $      5  $      1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Realized and unrealized gains and losses on derivative financial instruments are offset by realized and unrealized losses and gains on the underlying exposures being hedged.

NOTE 14. RELATED PARTY TRANSACTIONS

In the normal course of operations, the Company enters into various transactions on market terms with related parties which have been measured at exchange value and recognized in the consolidated financial statements. The following transactions have occurred between the Company and Brookfield during the normal course of business.

During the quarter the Company provided certain administrative services to Brookfield or its affiliates which was charged on a cost recovery basis. In addition, the Company periodically engaged the services of Brookfield or its affiliates for various financial, real estate and other business advisory services. During the quarter, the fees for these services were less than $1 million (2010 - less than $1 million) and were charged at market rates.

NOTE 15. GEOGRAPHIC SEGMENTS

The Company has a single reportable segment. The Company operates principally in North America and Europe. Sales by geographic segment are determined based on the origin of shipment and therefore include export sales.

    <<
    -------------------------------------------------------------------------
                                                                     Q1 2011
    -------------------------------------------------------------------------
    (US $ millions)        North America      Europe  Unallocated      Total
    -------------------------------------------------------------------------
    Sales                      $     133   $     120   $       -   $     253
    EBITDA(1)                          7          11          (4)         14
    Depreciation                       8           6           -          14
    Investment in property,
     plant and equipment               3           5           -           8
    Property, plant and
     equipment                       660         153           1         814
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                                     Q1 2010
    -------------------------------------------------------------------------
    (US $ millions)        North America      Europe  Unallocated      Total
    -------------------------------------------------------------------------
    Sales                      $     116   $      81   $       -   $     197
    EBITDA(1)                          8           4          (4)          8
    Depreciation                       7           4           -          11
    Investment in property,
     plant and equipment               1           -           -           1
    Property, plant and
     equipment(2)                    665         148           1         814
    -------------------------------------------------------------------------
    (1) EBITDA is earnings before interest, income tax and depreciation.
    (2) Balance as at December 31, 2010.
    >>

SELECTED ANNUAL DISCLOSURE

As these interim financial statements are the Company's first financial statements prepared using IFRS, certain disclosures that are required to be included in annual financial statements prepared in accordance with IFRS that were accordingly not included in the Company's most recent annual financial statements prepared in accordance with Canadian GAAP have been included in these financial statements for the comparative annual period as Note 16.

NOTE 16. PROPERTY PLANT AND EQUIPMENT

    <<
    -------------------------------------------------------------------------
                                                      Production
    (US $ millions)                 Land   Buildings   equipment       Total
    -------------------------------------------------------------------------
    Cost
    January 1, 2010            $      12   $     235   $   1,486   $   1,733
    Additions                          -           -          16          16
    Disposals                          -           -         (24)        (24)
    Effect of translation             (1)         (3)        (15)        (19)
    -------------------------------------------------------------------------
    December 31, 2010                 11         232       1,463       1,706
    -------------------------------------------------------------------------

    Accumulated depreciation
    January 1, 2010            $       -   $     114   $     765   $     879
    Additions                          -           8          43          51
    Disposals                          -           -         (24)        (24)
    Effect of translation              -          (1)        (13)        (14)
    -------------------------------------------------------------------------
    December 31, 2010                  -         121         771         892
    -------------------------------------------------------------------------

    Net
    January 1, 2010            $      12   $     121   $     721   $     854
    December 31, 2010                 11         111         692         814
    -------------------------------------------------------------------------
    >>

SOURCE Norbord Inc.

For further information: Heather Colpitts, Manager, Corporate Affairs, Tel. (416) 365-0705, info@norbord.com


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